Fannie Mae Changes Mortgage Guidelines on Down Payment Requirements

Down payment requirements were changed by Fannie Mae on December 13th 2010. Under new Fannie Mae guidelines, buyers of owner-occupied, 1-unit properties (i.e. single-family homes,condo's,town homes) can now forgo the minimum 5% down payment from their own funds. Down payments can now be comprised from 100% of gifted and/or granted monies. Buyers of second homes or investment homes or multi-unit properties must still make the required down payment from their own funds.

Other changes made are 1) Going forward Debt with fewer than 10 payments remaining must now be included in an applicant's monthly obligations and 2) Debt not reporting a monthly payment must be assigned a minimum payment equal to 5% of the outstanding credit balance. These edits will raise some applicant's Debt-to-Income Ratio's and push some buyers beyond the maximum allowed limits resulting in a denial. People with large car payments are especially susceptible.

Fannie Mae is easing however it's down payment requirements for owner occupied SFR,condo's and town homes and they are easing some of it's income documentation requirements. Salaried applicants from who commissions and/or bonuses account for less than 25% of their annual income will have fewer pay stubs to produce for underwriters.

Fannie Mae's Complete guideline changes are available online at http://efanniemae.com

These changes are for conventional loans only and do not apply to government loans such as FHA,VA or USDA backed loans.